The yen fell the most against the euro since January 2001 and dropped
versus the dollar as a rebound in global stocks encouraged investors to
reduce bets against higher-yielding currencies.
The currency declined versus the Australian and New Zealand dollars on
speculation carry trades will get a boost and Japan's central bank will
sell the yen for the first time in four years to help exporters.
The Standard & Poor's 500 Index increased 0.4 percent after Japan's
Nikkei 225 Stock Average rebounded from the lowest level in 26 years.
The S&P 500 fell yesterday to the lowest level since March 2003 on
concern the credit crunch will cause the global economic slump to
deepen.
In a sign financial institutions are becoming less nervous about
extending loans, the London interbank offered rate, or Libor, that
banks charge each other for three-month loans in dollars fell 0.04
percentage point to 3.47 percent, its 12th straight drop, according to
the British Bankers' Association. The Federal Reserve began buying
short-term corporate debt yesterday to revive lending markets.
``We're seeing a little bit of confidence shored up with the Fed
commercial paper facility opening up,'' said Jessica Hoversen, a
fixed-income and currency analyst at MF Global Ltd. in Chicago.
The yen pared losses against the dollar after the Conference Board, a
New York-based research group, said its consumer confidence index
decreased to 38, the lowest reading since monthly records began in
1967.
The euro may weaken to $1.22 this week as the ``worries over Europe's
economy are heightening,'' said Ryohei Muramatsu, manager of Group
Treasury Asia at Commerzbank AG in Tokyo. European Central Bank
President Jean-Claude Trichet said yesterday policy makers may cut
interest rates next week.
